Among his other priorities for 2012, D.V. Sadananda Gowda hopes to attract greater investment to Karnataka’s power sector.

Karnataka Chief Minister D.V. Sadananda Gowda has a message for global investors who may have been put off by the state’s string of corruption scandals and political turbulence: Karnataka is cleaning up its act, he says, and is as good an investment destination as ever.

In an interview Wednesday in New Delhi, where he and other state officials were meeting with companies including Shell, Rolls-Royce and PepsiCo, Mr. Gowda said the single most important move the state has made to address graft is the passage of a new “right-to-services” law that goes into effect today.

The new law requires public officials to deliver promised services within a given timeframe or face fines. The goal is to make it harder for bureaucrats to delay projects while seeking bribes for approving electricity connections, water hookups, environmental permits and about 150 other services.

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“We’ll put an end to all that, because within a time limit (officials) are supposed to clear all files,” Mr. Gowda said.

In fact, the new law isn’t just punitive – it also provides cash incentives and recognition to public servants who routinely do their jobs on time. Karnataka joins Bihar, Rajasthan and a few other states with similar right-to-services laws. Anti-corruption crusader Anna Hazare has said such “citizen charters” should be an integral part of fighting graft in India.

Karnataka has long had a reputation as one of India’s most investor-friendly states. It has one of the world’s largest technology clusters in Bangalore, is India’s leading software exporter and has become a bio-technology hub as well.

But the state’s image has lately taken a hit. Mr. Gowda came into office last August after his predecessor, B.S. Yeddyurappa, was forced to step down following a report by a state anti-corruption ombudsman that alleged widespread wrongdoing and graft in the mining sector. Among the allegations in the 25,000 page report was that companies bribed government officials, including Mr. Yeddyurappa, to get iron-ore mining permits. Mr. Yeddyurappa has denied profiting from illegal mining, and some of the companies named in the report have challenged its claims.

There have been other Karnataka scandals involving alleged kickbacks to state officials for making land plots available to companies. Since the state is ruled by the Bharatiya Janata Party, the various scandals made it harder for the party’s national-level officials to make their case that corruption is endemic to the Congress party, which heads the central government’s ruling coalition and has been under fire for its own series of scandals.

Mr. Gowda said investors have maintained faith in the state. “What has happened has had no impact – we’re going ahead with development works as usual,” he said. Karnataka is aiming for better than 10% average annual economic growth over the next five years, he said.

Mr. Gowda’s roadshow in New Delhi was in preparation for a big global investor summit in June in Bangalore – akin to the investor summits Gujarat holds. At the last such summit in 2010, Karnataka attracted about $78 billion in investment commitments. About 62% of the deals signed are in various stages of implementation now, state officials say.

Some of Mr. Gowda’s priorities for 2012 are to attract greater investment to Karnataka’s power sector – despite significant gains, rapidly growing demand is putting pressure on the state’s grid – and also to channel investment to transportation infrastructure, the state’s growing aerospace hub, education, agri-business and tourism.

For power, Karnataka, like most Indian states, depends largely on coal as a fuel, so India’s national coal shortage has affected its ability to bring some plants online. Gas power plants, meanwhile, won’t move forward until a gas pipeline from Maharashtra is completed next summer. The state hopes to build nearly 13,000 MW of additional power generation capacity in four years to meet growing demand.

One sector notably absent from the state’s foreign investment plans: retail. Mr. Gowda said he isn’t sure whether it’s a good idea for foreign supermarkets and department stores like Wal-mart to enter the multi-brand retail sector in his state. Critics of opening up foreign investment in retail say it would decimate the mom-and-pop retail marketplace. “We’ve got some resistance that we feel needs to be looked into,” Mr. Gowda said, adding that he’ll take his cue from what the national BJP party decides.“We need to take a political decision – my central party is looking into the matter.”

The central government approved, then rescinded, a measure late last year that would have allowed multi-brand retailers to own 51% of Indian joint ventures, in a major embarrassment for Prime Minister Manmohan Singh’s government.

Mr. Gowda’s tenure has been punctuated with political upheavals. There’s been lasting fallout from the report of the state anti-graft watchdog on iron-ore mining, which found that companies were forging mining permits, paying bribes to officials to facilitate their projects and exporting billions of dollars worth of iron ore illegally.

Meanwhile, earlier this month three state ministers were caught on tape watching pornographic video footage during assembly session, images that were broadcast on national TV for several days, causing huge embarrassment to Mr. Gowda. The three ministers were forced to resign. “What all happened in the House – we have taken immediate action against those persons. Really, we feel sorry about what has happened,” Mr. Gowda said.

The departure of the three ministers left Mr. Gowda in charge of 20 state government ministerial portfolios, a massive workload. “I want to have a cabinet expansion immediately – I can’t shoulder that many portfolios,” he said.

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